EXEO Group (TSE:1951) Posts Strong First Quarter Results, Is The Stock Too Expensive?

EXEO Group stock reacts to strong first quarter and capital moves

EXEO Group (TSE:1951) has drawn fresh attention after first quarter results for the period to June 30, 2026 were released, along with a board decision to consider disposing of treasury shares.

The company reported first quarter sales of ¥155,722 million compared with ¥138,599 million a year earlier. Net income was ¥6,907 million compared with ¥3,672 million, with basic earnings per share from continuing operations at ¥33.91 versus ¥17.82.

See our latest analysis for EXEO Group.

The latest first quarter figures and the board’s decision to consider disposing of treasury shares appear to have supported EXEO Group’s recent move, with the 1-day share price return of 1.34% and 1-year total shareholder return of 31.03% contrasting with a weaker 90-day share price return that is down 10.56%.

With EXEO Group’s earnings in focus and investor attention on infrastructure and communications spending, this can be a good moment to widen your watchlist using the Simply Wall St screener for 37 power grid technology and infrastructure stocks.

After EXEO Group’s strong first quarter and solid 1-year run, the share price still sits below the analyst price target. Has most of the upside already played out, or is the stock still pricing in some caution?

Price-to-Earnings of 15.9x for EXEO Group: Is it justified?

EXEO Group shares last closed at ¥2,676, with the stock trading on a P/E of 15.9x that screens as expensive compared with both its peers and the wider JP Construction industry.

The P/E ratio compares what investors are currently paying for each unit of earnings. For a company like EXEO Group, which operates across telecommunications infrastructure, urban infrastructure and system solutions, this measure often reflects how the market is weighing the reliability of its earnings stream against available alternatives in the same sector.

EXEO Group has a few elements that can support investor interest. The company has high quality earnings, pays a dividend yield of 2.99%, and has grown earnings by 3.9% per year over the past 5 years, with 24.5% earnings growth over the past year. However, earnings growth over the past year did not outperform the Construction industry, which returned 27.7%, and the company’s revenue is forecast to grow 0.8% per year, slower than the broader JP market. The current P/E of 15.9x sits above the JP Construction industry average of 11x and above the peer average of 12.7x. It is also higher than an estimated fair P/E of 14.3x that the market could potentially move toward.

Result: Price-to-Earnings of 15.9x (OVERVALUED)

Explore the SWS fair ratio for EXEO Group

However, EXEO Group still faces risks from a relatively high P/E compared with sector peers, as well as a 90-day share price performance that has fallen 10.56%.

Find out about the key risks to this EXEO Group narrative.

Another view on EXEO Group using cash flows

While the current P/E of 15.9x suggests EXEO Group looks expensive, the SWS DCF model also points to a full valuation. The stock trades at ¥2,676 compared with an estimated future cash flow value of ¥2,304.46, which implies the market price sits above this cash flow based estimate. For investors, the key question is whether the earnings profile justifies paying this kind of premium.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out EXEO Group for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 18 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

The mixed tone of this EXEO Group update makes it even more important that you review the figures yourself and decide how comfortable you are with the risk and reward balance. To see what optimistic investors are focusing on, take a closer look at the 3 key rewards.

Looking for more EXEO Group style investment ideas?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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